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Lotte E&C mulls sale of headquarters to boost solvency

Published: 27 Feb. 2025, 18:03

CHO YONG-JUN
[email protected]

Lotte Engineering and Construction headquarters in Seocho District, southern Seoul [YONHAP]

Lotte Engineering & Construction (E&C) is looking to sell its 500 billion won ($347 million) headquarters in Seocho District, southern Seoul, in an attempt to improve its financial solvency.

“Lotte E&C currently owns 1 trillion won in assets, including properties,” the company said in a press release Thursday.

“We are currently looking at asking for a consultation on our headquarters and are looking into ways we can utilize our warehouse site and [other] business site assets.”

Lotte E&C is currently in the process of selecting a consultation partner and is open to a variety of options depending on the consultation results.

The company can potentially develop the assets themselves, or sell them and sign a leaseback deal.

The 10,000-square-meter (107,640-square-foot) site, located near a high-end residential area in Jamwon-dong, is valued at around 500 billion won, according to the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily.

The site of the headquarters was included in Seoul Metropolitan Government’s 2023 special planning zones, allowing the site to be redeveloped into apartment complexes.

“Making efficient use of the assets will help reduce the company’s debt and debt ratio, and improve its current profit,” the press release said. “In 2026, we plan to reduce our debt ratio to 150 percent and improve our profit by 100 billion won.”

Lotte E&C, as of the third quarter of 2024, reported a 217 percent debt ratio — exceeding the 200 percent maximum ideal for construction sector firms.

The construction firm's holding company, Lotte Group, was hit with rumors of a potential liquidity crisis stemming from its struggling chemical and retail businesses at the end of 2024. Lotte Chemical — which was supposed to be the group’s cash cow — logged an operating loss of 41.4 billion won in the third quarter of last year. The group has since sold its rental car business and the automated teller machine business of 7-Eleven convenience stores, with a plan to also liquidate Lotte Healthcare.

BY CHO YONG-JUN [[email protected]]